module 12 The Meaning and Calculation of Unemployment 125
Section 3 Measurement of Economic Performance
e. Natasha, a graduate student, went back to school because
jobs were scarce.- Which of the following are consistent with the observed
relationship between growth in real GDP and changes in the
unemployment rate? Which are not?
a. A rise in the unemployment rate accompanies a fall in
real GDP.
b. An exceptionally strong business recovery is associated
with a greater percentage of the labor force being employed.
c. Negative real GDP growth is associated with a fall in the
unemployment rate.Tackle the Test: Multiple-Choice Questions
- To be considered unemployed, a person must
I. not be working.
II. be actively seeking a job.
III. be available for work.
a. I only
b. II only
c. III only
d. II and III
e. I, II, and III
Use the information for a hypothetical economy presented in the
following table to answer questions 2, 3, and 4.
- What is the labor force participation rate?
a. 70%
b. 50%
c. 20%
d. 10%
e. 5%- How many people are unemployed?
a. 10,000
b. 20,000
c. 30,000
d. 100,000
e. 110,000 - What is the unemployment rate?
a. 70%
b. 50%
c. 20%
d. 10%
e. 5% - The unemployment problem in an economy may be
understated by the unemployment rate due to
a. people lying about seeking a job.
b. discouraged workers.
c. job candidates with one offer but waiting for more.
d. overemployed workers.
e. none of the above.
Tackle the Test: Free-Response Questions
- Use the data provided below to calculate each of the following.
Show how you calculate each.
a. the size of the labor force
b. the labor force participation rate
c. the unemployment rate
Population age 16 and older =12 million
Employment =5 million
Unemployment =1 million
Answer (6 points)
1 point:6 million
1 point:employment +unemployment =5 million +1 million =6 million
1 point:50%
1 point:(labor force/population) × 100 =((5 million +1 million)/12 million) ×
100 =(6 million/12 million) × 100 =50%
1 point:17%
1 point:(unemployment/labor force) × 100 =(1 million/(5 million +1 million)) ×
100 =(1 million/6 million) × 100 =17%
- What is the labor market classification of each of the following
individuals? Be as specific as possible, and explain your answer.
a. Julie has a graduate degree in mechanical engineering. She
works full-time mowing lawns.
b. Jeff was laid off from his previous job. He would very much
like to work at any job, but, after looking for work for a year,
has stopped looking for work.
c. Ian is working 25 hours per week at a bookstore, and has no
desire to work full time.
d. Raj has decided to take a year off from work to stay home
with his daughter.
Population age 16 and older =200,000
Labor Force =100,000
Number of people working part time =20,000
Number of people working full time =70,000